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CHAPTER 1
I. MULTIPLE CHOICE QUESTIONS (CHOOSE THE BEST ANSWER IN EACH QUESTION)
PART 1_ TEN PRINCIPLES OF ECONOMICS
HOW PEOPLE MAKE DECISIONS
1. The phrase “no such thing as a free lunch” means
a. people must face tradeoffs.
b. rational people think at the margin.
c. people respond to incentives.
d. trade can make everyone better off.
2. Which of the following statements best represents the principle represented by the adage,
"There is no such thing as a free lunch"?
a. Melissa can attend the concert only if she takes her sister with her.
b. Greg is hungry and homeless.
c. Brian must repair the tire on his bike before he can ride it to class.
d. Kendra must decide between going to Colorado or Cancun for spring break.
3. The principle that "people face tradeoffs" applies to a. individuals. b. families. c. societies.
d. All of the above are correct.
4. When society requires that firms reduce pollution, there is
a. a tradeoff because of reduced incomes to the firms' owners and workers.
b. a tradeoff only if some firms are forced to close.
c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements.
d. no tradeoff, since everyone benefits from reduced pollution.
5. Economists use the word equality to describe a situation in which
a. each member of society has the same income.
b. each member of society has access to abundant quantities of goods and services,
regardless of his or her income.
c. society is getting the maximum benefits from its scarce resources.
d. society's resources are used efficiently. 6. Efficiency means that
a. society is conserving resources in order to save them for the future.
b. society's goods and services are distributed equally among society's members.
c. society's goods and services are distributed fairly, though not necessarily equally, among society's members.
d. society is getting the maximum benefits from its scarce resources.
7. The property of society getting the most it can from its scarce resources is called a. equity. b. efficiency. c. equality. d. efficacy.
8. The opportunity cost of an item is
a. the number of hours needed to earn money to buy the item.
b. what you give up to get that item.
c. usually less than the dollar value of the item.
d. the dollar value of the item.
9. In economics, the cost of something is
a. the dollar amount of obtaining it.
b. always measured in units of time given up to get it.
c. what you give up to get it.
d. often impossible to quantify, even in principle.
10. What you give up to obtain an item is called your a. opportunity cost. b. explicit cost. c. monetary cost. d. direct cost.
11. When computing the opportunity cost of attending a concert you should include
a. the price you pay for the ticket and the value of your time.
b. the price you pay for the ticket, but not the value of your time.
c. the value of your time, but not the price you pay for the ticket.
d. neither the price of the ticket nor the value of your time.
12. Denise decides to spend three hours working overtime rather than watching a video with her
friends. She earns $10 an hour. Her opportunity cost of working is a. the $30 she earns working.
b. the $30 minus the enjoyment she would have received from watching the video.
c. the enjoyment she would have received had she watched the video.
d. nothing, since she would have received less than $30 of enjoyment from the video.
13. Ellie decides to spend two hours taking a nap rather than attending her classes. Her
opportunity cost of napping is
a. the value of the knowledge she would have received had she attended class.
b. the $24 she could have earned if she had worked at her job for those two hours.
c. the value of her nap less the value of attending class.
d. nothing, since she valued sleep more than attendance at class.
14. Ed spends an hour studying instead of watching tv with his friends. The opportunity cost to him of studying is
a. the improvement in his grades from studying for the hour.
b. the improvement in his grades from studying minus the enjoyment of watching tv.
c. the enjoyment he would have received if he had watched tv with his friends.
d. zero. Since Ed chose to study rather than to watch tv, the value of studying must
have been greater than the value of watching tv.
15. The opportunity cost of going to college is
a. the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.
b. the value of the best opportunity a student gives up to attend college.
c. zero for students who are fortunate enough to have all of their college expenses paid by someone else.
d. zero, since a college education will allow a student to earn a larger income after graduation.
16. When calculating the cost of college, which of the following should you probably not include? a. The cost of tuition
b. The cost of books required for college classes
c. The income you would have earned had you not gone to college
d. The cost of rent for your off-campus apartment.
17. When calculating the cost of college, which of the following should you probably include?
a. The cost of your meal plan for the cafeteria.
b. The cost of books required for college classes
c. The income you earn at your part-time job.
d. The cost of living in the dormitory. 18. A rational decisionmaker
a. ignores marginal changes and focuses instead on “the big picture.”
b. ignores the likely effects of government policies when he or she makes choices.
c. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
d. takes an action only if the combined benefits of that action and previous actions
exceed the combined costs of that action and previous actions.
19. A rational decision maker takes an action only if the
a. marginal benefit is less than the marginal cost.
b. marginal benefit is greater than the marginal cost.
c. average benefit is greater than the average cost.
d. marginal benefit is greater than both the average cost and the marginal cost.
20. A rational decisionmaker takes an action if and only if
a. the marginal benefit of the action exceeds the marginal cost of the action.
b. the marginal cost of the action exceeds the marginal benefit of the action.
c. the marginal cost of the action is zero.
d. the opportunity cost of the action is zero.
21. Rational people make decisions at the margin by
a. following marginal traditions.
b. behaving in a random fashion.
c. thinking in black-and-white terms.
d. comparing marginal costs and marginal benefits.
22. Making rational decisions "at the margin" means that people
a. make those decisions that do not impose a marginal cost.
b. evaluate how easily a decision can be reversed if problems arise.
c. compare the marginal costs and marginal benefits of each decision.
d. always calculate the dollar costs for each decision.
23. People are willing to pay more for a diamond than for a bottle of water because
a. the marginal cost of producing an extra diamond far exceeds the marginal cost of
producing an extra bottle of water.
b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
c. producers of diamonds have a much greater ability to manipulate diamond prices
than producers of water have to manipulate water prices.
d. water prices are held artificially low by governments, since water is necessary for life.
24. Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty
rooms for tonight. If the marginal cost of operating one room for one night is $30 and a
customer is willing to pay $60 for the night, the hotel manager should
a. rent the room because the marginal benefit exceeds the marginal cost.
b. rent the room because the marginal benefit exceeds the average cost.
c. not rent the room because the marginal benefit is less than the marginal cost.
d. not rent the room because the marginal benefit is less than the average cost.
25. Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty
rooms for tonight. The marginal cost per room per night a. is $40. b. is $80. c. is $120.
d. cannot be determined from the information given.
26. Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty
rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel
manager should rent one of the empty rooms only if a customer is willing to pay
a. more than $40, as the average benefit will exceed the marginal cost.
b. more than $40, as the marginal benefit will exceed the marginal cost.
c. more than $80, as the average benefit will exceed the marginal cost.
d. more than $80, as the marginal benefit will exceed the marginal cost.
27. You are considering staying in college another semester so that you can complete a major in
economics. In deciding whether or not to stay you should
a. compare the total cost of your education to the total benefits of your education.
b. compare the total cost of your education to the benefits of staying one more semester.
c. compare the cost of staying one more semester to the benefits of staying one more semester.
d. compare the total benefits of your education to the cost of staying one more semester.
28. You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider
eating a third. As a rational consumer you should make your choice by comparing
a. the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs.
b. the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs.
c. the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs.
d. the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.
29. Your professor loves her work, teaching economics. She has been offered other positions in
the corporate world that would increase her income by 25 percent, but she has decided to
continue working as a professor. Her decision would not change unless the marginal
a. cost of teaching increased.
b. benefit of teaching increased.
c. cost of a corporate job increased.
d. benefit of a corporate job decreased.
30. Suppose your management professor has been offered a corporate job with a 30 percent pay
increase. He has decided to take the job. For him, the marginal
a. cost of leaving was greater than the marginal benefit.
b. benefit of leaving was greater than the marginal cost.
c. benefit of teaching was greater than the marginal cost.
d. All of the above are correct.
HOW PEOPLE INTERACT
1.Which of the following is a principle concerning how people interact?
a. Markets are usually a good way to organize economic activity.
b. Rational people think at the margin.
c. People respond to incentives.
d. All of the above are correct.
2. Trade between countries tends to
a. reduce both competition and specialization.
b. reduce competition and increase specialization.
c. increase competition and reduce specialization.
d. increase both competition and specialization. 3. Trade
a. allows specialization, which increases costs.
b. allows specialization, which reduces costs.
c. reduces specialization, which increases costs.
d. reduces specialization, which reduces costs.
4. Central planning refers to
a. markets guiding economic activity. Today many countries that had this system have abandoned it.
b. markets guiding economic activity. Today many countries that did not have this system have implemented it.
c. government guiding economic activity. Today many countries that had this system have abandoned it.
d. government guiding economic activity. Today many countries that did not have
this system have implemented it.
5. Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
a. There is no such thing as a free lunch.
b. People buy more when prices are low than when prices are high.
c. No matter how much people earn, they tend to spend more than they earn.
d. Households and firms interacting in markets are guided by an "invisible hand" that
leads them to desirable market outcomes.
6. The term "invisible hand" was coined by a. Adam Smith. b. David Ricardo. c. Karl Marx. d. Benjamin Franklin.
7. The "invisible hand" directs economic activity through a. advertising. b. prices. c. central planning. d. government regulations.
8. The invisible hand refers to
a. how central planners made economic decisions.
b. how the decisions of households and firms lead to desirable market outcomes.
c. the control that large firms have over the economy.
d. government regulations without which the economy would be less efficient.
9. The self-interest of the participants in an economy is guided into promoting general economic self-interest by a. the invisible hand. b. market power. c. government intervention. d. oikonomos.
10. In a market economy, who makes the decisions that guide most economic activity? a. firms only b. households only c. firms and households d. government
11. In a market economy, economic activity is guided by a. the government. b. corporations. c. central planners. d. self-interest and prices.
12. If the price of visiting a doctor were fixed below the current price, then we would expect
a. an increase in the number of visits people want to make and an increase in the
number of visits health care providers want to provide.
b. an increase in the number of visits people want to make and a decrease in the
number of visits health care providers want to provide.
c. a decrease in the number of visits people want to make and an increase in the
number of visits health care providers want to provide.
d. a decrease in the number of visits people want to make and a decrease in the
number of visits health care providers want to provide.
13. The term market failure refers to
a. a situation in which the market on its own fails to allocate resources efficiently.
b. an unsuccessful advertising campaign which reduces demand for a product.
c. a situation in which competition among firms becomes ruthless.
d. a firm which is forced out of business because of losses.
14. Market failure can be caused by a. low consumer demand. b. equilibrium prices.
c. externalities and market power.
d. high prices and foreign competition.
15. When a species of fish dies off due to pollution in a river where it once lived, this is an example of
a. a market failure caused by an externality.
b. a market failure caused by market power.
c. a market failure caused by equality.
d. There is no market failure in this case.
16. The term "market failure"
a. means the same thing as "market power."
b. refers to the dissolution of a market when firms decide to quit producing a certain product.
c. refers to the failure of a market to produce an efficient allocation of resources.
d. refers to government's failure to enforce the property rights of households or firms
that participate in a certain market.
17. An example of an externality is the impact of
a. bad weather on the income of farmers.
b. the personal income tax on a person's ability to purchase goods and services.
c. pollution from a factory on the health of people in the vicinity of the factory.
d. increases in health care costs on the health of individuals in society.
18. Which of the following is an example of an externality? a. Annie purchases a handbag.
b. Bob’s dog barks loudly during the night waking his neighbors.
c. Clark sells a book to Calvin.
d. David watches a scary movie.
19. When a single person (or small group) has the ability to influence market prices, there is a. competition. b. market power. c. an externality. d. a lack of property rights.
20. Market power refers to the
a. power of a single person or small group to influence market prices.
b. ability of a person or small group to successfully market new products.
c. power of the government to regulate a market.
d. importance of a certain market in relation to the overall economy.
21. Which of the following firms is most likely to have market power?
a. a grocery store in a metropolitan area b. a gas station in a suburb c. a pub in a college town
d. the only hotel in a rural area
PART 2_ THINKING LIKE AN ECONOMIST
THE ECONOMIST AS SCIENTIST
1. Economists, like mathematicians, physicists, and biologists,
a. make use of the scientific method.
b. try to address their subject with a scientist’s objectivity.
c. devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
d. All of the above are correct. 2. The scientific method is
a. the use of modern technology to understand the way the world works.
b. the use of controlled laboratory experiments to understand the way the world works.
c. the dispassionate development and testing of theories about how the world works.
d. the search for evidence to support preconceived theories about how the world works.
3. With respect to how economists study the economy, which of the following statements is most accurate?
a. Economists study the past, but they do not try to predict the future.
b. Economists use “rules of thumb” to predict the future.
c. Economists devise theories, collect data, and analyze the data to test the theories.
d. Economists use controlled experiments in much the same way that biologists and physicists do.
4. In conducting their research, economists face an obstacle that not all scientists face;
specifically, in economics, it is often difficult and sometimes impossible to
a. make use of theory and observation.
b. rely upon the scientific method.
c. conduct laboratory experiments.
d. find articles or books that were written before 1900.
5. The most common data for testing economic theories come from
a. carefully controlled and conducted laboratory experiments.
b. computer models of economies.
c. historical episodes of economic change.
d. centrally planned economies.
6. One thing economists do to help them understand how the real world works is a. make assumptions. b. ignore the past.
c. try to capture every aspect of the real world in the models they construct.
d. All of the above are correct.
7. Economists make assumptions in order to
a. mimic the methodologies employed by other scientists.
b. minimize the number of experiments that yield no useful data.
c. minimize the likelihood that some aspect of the problem at hand is being overlooked.
d. focus their thinking on the essence of the problem at hand.
8. Economists make assumptions to
a. provide issues for political discussion.
b. make a complex world easier to understand.
c. make it easier to teach economic concepts and analysis.
d. create policy alternatives that are incomplete or subject to criticism.
9. Which of the following statements about models is correct?
a. The more details a model includes, the better the model.
b. Models assume away irrelevant details.
c. Models cannot be used to explain how the economy functions.
d. Models cannot be used to make predictions.
10. Which of the following is not correct about most economic models?
a. They are composed of equations and diagrams.
b. They contribute very little to economists’ understanding of the real world.
c. They omit many features of the real-world economy.
d. In constructing models, economists make assumptions. 11. Economic models
a. are not useful because they omit many real-world details.
b. are usually composed of diagrams and equations.
c. are useful because they do not omit any real-world details.
d. are usually plastic representations of the economy.
12. Economists build economic models by a. generating data.
b. conducting controlled experiments in a lab. c. making assumptions.
d. reviewing statistical forecasts.
13. Economic models are built with
a. recommendations concerning public policies.
b. facts about the legal system. c. assumptions. d. statistical forecasts.
14. In constructing models, economists
a. leave out equations, since equations and models tend to contradict one another.
b. ignore the long run, since models are useful only for short-run analysis.
c. sometimes make assumptions that are contrary to features of the real world.
d. try to include every feature of the economy. 15. Economic models
a. are people who act out the behavior of firms and households so that economists can study this behavior.
b. are usually detailed replications of reality.
c. incorporate simplifying assumptions that often contradict reality, but also help
economists better understand reality.
d. are useful to researchers but not to teachers because economic models omit many
details of the real-world economy.
16. Which of the following statements is correct?
a. Few economic models incorporate assumptions.
b. Different economic models employ different sets of assumptions.
c. Good economic models attempt to mimic reality as closely as possible.
d. Economic models, to be accepted, must be tested by conducting experiments.
17. Which of these statements about economic models is correct?
a. For economists, economic models provide insights about the world.
b. Economic models are built with assumptions.
c. Economic models are often composed of equations and diagrams.
d. All of the above are correct.
18. The circular-flow diagram is an example of a. a laboratory experiment. b. an economic model. c. a mathematical model.
d. All of the above are correct.
19. A circular-flow diagram is a model that
a. helps to explain how participants in the economy interact with one another.
b. helps to explain how the economy is organized.
c. incorporates all aspects of the real economy.
d. Both (a) and (b) are correct.
20. The circular-flow diagram a. is an economic model.
b. incorporates two types of decision makers: households and firms.
c. represents the flows of inputs, outputs, and dollars.
d. All of the above are correct.
21. In the simple circular-flow diagram, the participants in the economy are a. firms and government. b. households and firms. c. households and government.
d. households, firms, and government.
22. Which two groups of decision makers are included in the simple circular-flow diagram? a. markets and government b. households and government c. firms and government d. households and firms
23. In the circular-flow diagram, firms produce
a. goods and services using factors of production. b. output using inputs.
c. factors of production using goods and services.
d. Both (a) and (b) are correct.
24. Factors of production are
a. used to produce goods and services. b. also called output.
c. abundant in most economies.
d. assumed to be owned by firms in the circular-flow diagram.
25. In the circular-flow diagram, which of the following is not a factor of production? a. labor b. land c. capital d. money
26. In the circular-flow diagram,
a. firms own the factors of production.
b. the factors of production are labor, land, and capital.
c. the factors of production are also called “output.”
d. All of the above are correct.
27. Which of these terms are used interchangeably?
a. "goods and services" and "inputs"
b. "goods and services" and "factors of production"
c. "inputs" and "factors of production"
d. "land, labor, and capital" and "goods and services"
28. Another term for factors of production is a. inputs. b. output. c. goods. d. services.
29. In economics, capital refers to
a. the finances necessary for firms to produce their products.
b. buildings and machines used in the production process.
c. the money households use to purchase firms' output. d. stocks and bonds.
30. A model that shows how dollars flow through markets among households and firms is called the
a. production possibilities frontier. b. circular-flow diagram. c. demand and supply diagram.
d. comparative advantage model.
31. In the simple circular-flow diagram, households
a. are the only decision makers.
b. own the factors of production. c. are buyers of inputs.
d. consume only some of the goods and services that firms produce.
32. In the simple circular-flow diagram,
a. households own the factors of production.
b. households buy all the goods and services that firms produce.
c. land, labor, and capital flow from households to firms.
d. All of the above are correct.
33. In the simple circular-flow diagram, who consumes the goods and services that firms produce? a. households only b. firms only c. both households and firms
d. neither households nor firms
34. In the circular-flow diagram, another name for goods and services produced by firms is a. factors of production. b. output. c. inputs. d. resources.
35. The two loops in the circular-flow diagram represent
a. the flow of goods and the flow of services.
b. the flow of dollars and the flow of financial assets.
c. the flow of inputs into production processes and the flow of outputs from production processes.
d. the flows of inputs and outputs and the flow of dollars.
36.In the circular-flow diagram, which of the following items flows from households to firms
through the markets for the factors of production? a. goods and services b. land, labor, and capital
c. dollars spent on goods and services d. wages, rent, and profit
37. An economy’s production of two goods is efficient if
a. all members of society consume equal portions of the goods.
b. the goods are produced using only some of society’s available resources.
c. it is impossible to produce more of one good without producing less of the other.
d. the opportunity cost of producing more of one good is zero.
38. When an economy is operating at a point on its production possibilities frontier, then
a. consumers are content with the mix of goods and services that is being produced.
b. there is no way to produce more of one good without producing less of the other.
c. equal amounts of the two goods are being produced.
d. All of the above are correct.
39. Efficiency is illustrated by
a. both the production possibilities frontier and the circular-flow diagram.
b. neither the production possibilities frontier nor the circular-flow diagram.
c. the production possibilities frontier only.
d. the circular-flow diagram only.
40. Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that
a. the nation is producing beyond its capacity, so inflation will occur.
b. the nation is not using all available resources or is using inferior technology or both.
c. the nation is producing an efficient combination of goods.
d. there will be a large opportunity cost if the nation tries to increase production of any good.
41. Unemployment would cause an economy to
a. produce inside its production possibilities frontier.
b. produce on its production possibilities frontier.
c. produce outside its production possibilities frontier.
d. experience an inward shift of its production possibilities frontier.
42. A production possibilities frontier can shift outward if
a. government increases the amount of money in the economy.
b. there is a technological improvement.
c. resources are shifted from the production of one good to the production of the other good.
d. the economy abandons inefficient production methods in favor of efficient production methods.
43. A microeconomist — as opposed to a macroeconomist — might study
a. the effect of borrowing by the federal government on the inflation rate.
b. the effect of rising oil prices on employment in the airline industry.
c. changes in the nation’s unemployment rate over short periods of time.
d. alternative policies to promote higher living standards throughout the nation.
44. Which of the following would likely be studied by a microeconomist rather than a macroeconomist?
a. the effect of foreign direct investment on economic growth
b. the effect of a sales tax on the cigarette industry
c. the effect of an investment tax credit on the economy’s capital stock
d. the effect of a war on government spending
THE ECONOMIST AS POLICY ADVISER
1. When economists are trying to explain the world, they are a. scientists. b. policy advisers.
c. in the realm of microeconomics rather than macroeconomics.
d. in the realm of normative economics rather than positive economics.
2. When economists are trying to help improve the world, they are
a. in the realm of positive economics rather than normative economics.
b. in the realm of macroeconomics rather than microeconomics. c. scientists. d. policy advisers.
3. Which of the following statements is correct about the roles of economists?
a. Economists are best viewed as policy advisers.
b. Economists are best viewed as scientists.
c. In trying to explain the world, economists are policy advisers; in trying to improve
the world, they are scientists.
d. In trying to explain the world, economists are scientists; in trying to improve the
world, they are policy advisers.
4. When an economist is asked a question like “why is unemployment higher for teenagers
than for older workers?” the economist
a. is asked to explain the cause of an economic event.
b. is asked to recommend a policy to improve economic outcomes.
c. is asked as a policy adviser.
d. does not have enough information to respond.
5. For economists, statements about the world are of two types: a. assumptions and theories.
b. true statements and false statements.
c. specific statements and general statements.
d. positive statements and normative statements. 6. Normative statements are
a. prescriptive, whereas positive statements are descriptive.
b. descriptive, whereas positive statements are prescriptive.
c. backward-looking, whereas positive statements are forward-looking.
d. forward-looking, whereas positive statements are backward-looking. 7. Positive statements are a. prescriptive.
b. claims about how the world should be.
c. claims about how the world is.
d. made by economists speaking as policy advisers. 8. Normative statements are a. descriptive.
b. claims about how the world should be.
c. claims about how the world is.
d. made by economists speaking as scientists.
9. Positive statements are not a. descriptive. b. prescriptive.
c. claims about how the world is.
d. made by economists speaking as scientists.
10. Normative statements are not a. descriptive. b. prescriptive.
c. claims about how the world should be.
d. made by economists speaking as policy advisers.
11. A statement describing how the world is a. is a normative statement. b. is a positive statement.
c. would only be made by an economist speaking as a policy adviser.
d. would only be made by an economist employed by the government.
12. A statement describing how the world should be a. is a normative statement. b. is a positive statement.
c. would only be made by an economist speaking as a scientist.
d. would only be made by an economist employed by the government.
13. Economists view positive statements as
a. affirmative, justifying existing economic policy.
b. optimistic, putting the best possible interpretation on things.
c. descriptive, making a claim about how the world is.
d. prescriptive, making a claim about how the world ought to be.
14. Economists view normative statements as
a. prescriptive, making a claim about how the world ought to be.
b. descriptive, making a claim about how the world is.
c. statements about the normal condition of the world.
d. pessimistic, putting the worst possible interpretation on things.
15. Economists speaking like scientists make a. normative statements. b. prescriptive statements.
c. claims about how the world is.
d. claims about how the world should be.
16. Economists speaking like policy advisers make a. positive statements. b. descriptive statements.
c. claims about how the world is.
d. claims about how the world should be.
17. Economists speaking like scientists make a. positive statements. b. prescriptive statements.
c. claims about how the world should be.
d. More than one of the above is correct.
18. Economists speaking like policy advisers make
a. claims about how the world is. b. descriptive statements. c. normative statements.
d. More than one of the above is correct.
19. When economists make positive statements, they are a. speaking as scientists.
b. speaking as policy advisers.
c. making claims about how the world should be.
d. revealing that they are very conservative in their views of how the world works.
20. When economists make normative statements, they are a. speaking as scientists.
b. speaking as policy advisers.
c. making claims about how the world is.
d. revealing that they are very liberal in their views of how the world works. 21. When economists make